## Facts

- Parmalat Finanziaria S.p.A., an Italian food company, expanded rapidly through extensive borrowing, including from Citigroup-related entities.
- Parmalat collapsed in 2003 after widespread fraud by senior insiders, including falsified financial statements and fabricated records.
- Enrico Bondi was appointed extraordinary commissioner in Italian extraordinary administration and sued Citi-affiliated defendants in New Jersey.
- Bondi alleged Citi facilitated and profited from Parmalat insiders’ misconduct that contributed to Parmalat’s collapse.
- Citi asserted in pari delicto, arguing the insiders’ wrongdoing was imputable to Parmalat and barred Parmalat’s representative from recovering.
- Bondi argued the adverse-interest exception prevented imputation because insiders acted solely for themselves and against Parmalat’s interests.
- The trial court applied Italian law, limited Bondi’s ability to assert certain claims, and dismissed the action largely on in pari delicto grounds.

## Issues

1. Whether Italian law governed key questions concerning the commissioner’s authority and the applicable imputation framework.
2. Whether Bondi, as extraordinary commissioner, had standing to assert the asserted claims and, if so, whether he was subject to the same defenses as Parmalat.
3. Whether Parmalat insiders’ fraud was imputable to the corporation such that in pari delicto barred claims against Citi.
4. Whether the adverse-interest exception prevented imputation on the pleaded facts.

## Decision

- The Appellate Division largely affirmed dismissal of Bondi’s claims.
- The court accepted the trial court’s conclusion that Italian interests predominated and that Italian law applied to core issues.
- The court held Bondi stood in Parmalat’s shoes and was subject to defenses available against Parmalat.
- The court held insiders’ misconduct was imputable to Parmalat and that in pari delicto barred the claims.
- The court held the adverse-interest exception did not apply because the fraud produced at least some short-term corporate benefits (e.g., access to financing and continued expansion), so insiders had not totally abandoned corporate interests.

## Legal Principles

- A foreign insolvency representative generally “stands in the shoes” of the debtor and takes claims subject to defenses that could be asserted against the debtor, including equitable defenses.
- Corporate agents’ knowledge and conduct, particularly senior management’s, are ordinarily imputed to the corporation for claims arising from that conduct.
- In pari delicto bars a plaintiff that is at least equally at fault from shifting losses arising from its own wrongdoing to another alleged wrongdoer.
- The adverse-interest exception is narrow and applies only when agents totally abandon the corporation’s interests and act solely for personal purposes; mixed motives or some corporate benefit defeats the exception.
- Choice-of-law analysis may apply foreign law when the debtor’s domicile, insolvency proceedings, and regulatory interests are predominantly foreign.

## Conclusion

The Appellate Division held that Italian law controlled core questions and that Bondi, as Parmalat’s extraordinary commissioner, was subject to imputation and in pari delicto defenses; because Parmalat received some benefit from insiders’ fraud, the adverse-interest exception did not apply and the action against Citi was largely barred.


Bondi v. Citigroup, Inc., 423 N.J. Super. 377, 32 A.3d 1158 (N.J. Super. Ct. App. Div. 2011)